2015: Ten Nonprofit Trends

The new year will be a better year all around for the nonprofit sector, part of the post 2008-09 recovery. Many variables are in play, as always, with the following ten standing out for special attention in 2015.

1. The Growing Disparity within the Nonprofit Sector

Similar to the growing disparity in family household incomes, there is and will continue to be a growing gap between the well-established large nonprofits and the smaller less stable mass. In terms of percentage growth, in terms of income growth, in terms of program growth, the larger organizations are thriving while the others are, in many cases, holding on.

Part of this may be explained by major donors focusing on those they know. Part may be explained by the lack of credentials among many of the smaller groups, given the scandalous shortage of competent CEOs and development people. Part may be explained by the very large number of competing organizations in the sector.

On the horizon may be consolidation of various types, from collaboratives to mergers, better training opportunities for nonprofit executives and increased donations as a result of a surging economy.

2. The Acceleration of Transitions

More CEOs and top-level staff in agencies will retire or leave their posts in 2015. Thanks to the increased value in the stock market and overall economy, the various pension plans will now enable individuals to retire with reasonable promise of having enough funds to live on.

So the circulation of top executives will turn into a cascade, with the ensuing problem that there are insufficiently trained individuals to replace them in kind. Few nonprofits, especially the smaller ones, have any type of transition or succession policy or the funds to train or to have search firms find new leadership, so another crisis will be impending.

3. Emphasis on Impact

First requested by larger foundations, the need to show measurable impact on society will become the standard for most grant applications to foundation and corporations and to a growing number of individual donors, especially young major donors.

Government is also moving toward this and will require more and more grants and contracts to have impact measurement as part of the requirements.

This should spur more training in the methodology of measuring and demonstrating outcomes and impact as well as specialized consulting in that area. The question of who will pay for all of these changes will remain.

While storytelling, testimonials and anecdotes will continue to be important, especially among certain segments of donors, data will take an equal place in the case statements and appeals of these organizations.

4. Emphasis on Focus

Focus will dominate two very different areas of the sector.

Donors will continue to focus more and more of their contributions on fewer and fewer agencies, those whose results and impact resonate with the donors’ values. This trend will also continue with foundations and with corporations, with the latter increasingly moving their contributions to areas in which they do business or produce products and services.

Focus will also affect the programming of nonprofits. Streamlining, lean and six sigma methodologies and better budgetary analysis, as well as practical common sense, will see organizations dropping marginal activities and focusing on those areas in which they excel and in which they have sustainable or increasing revenue.

5. Increase Advocacy

With increasing pressures on government spending and with trends in many states for budget cuts, many more nonprofits will find advocacy a growing imperative. Agencies with heavy reliance on government contracts and grants will be joined by those that traditionally shunned legislative involvement. New public advocacy coalitions and associations will join the well established nonprofit lobbying organizations to put additional pressure on elected representative.

6. Focus on the Top of the Giving Pyramid

While the pyramid concept in descriptions and analysis of overall donations will remain a tool, the pyramid’s shape will change. The efficiency of working the top of the pyramid and increasing numbers and revenues there will become even more widespread. Additional major gift officers and grant writers will come into the development effort.

Attention will be diverted from the bottom of the pyramid, although long-term thinking will prevent major abandonment of new and small givers.

Complementary to this trend will be a very large increase in emphasis on planned giving, especially on those major donors focusing their donations. Many donors fearing outliving their resources will be attracted to the idea of lifetime income and will become prime prospects for planned giving.

7. A New Round of Capital Campaigns

With the renewed strength and growth of the economy, large and successful nonprofits will study and engage in a new round of capital campaigns with larger goals.

Such rifle-shot campaigns will also focus on the major donor and planned giving will become a larger part of the overall total raised. This may result in borrowing to cover revenue gaps caused by the deferred income from planned gifts.

8. Search for the New Donor

With widespread wealth among new sectors of society, the transfer of wealth to a new generation and increasing population diversity, reliance on the traditional corps of donors will shift to a continual attempt to develop new constituencies and to cultivate new prospects.

The requirements for this type of activity will largely be dependent on Boards willing to expand their membership, as well as their outreach and their willingness to open new doors, CEOs externalizing their activities to much broader venues and imaginative development directors keeping abreast of the many changes arising in the society and economy.

Millennials, new wealth, diverse individuals and groups—all will be the prospects for aggressive constituency growth, a competitive and resource/labor intensive undertaking.

9. Increased Attention to Stewardship and Retention of Donors

With retention declining to less than an average of 50% among donors in nonprofits overall, there will be large increases in the time and resources devoted to stewardship.

More attention will be paid to existing donors and there will be more segmentation of the donor pool to attempt to cater to their various preferences in program interests.

10. Search for Innovations in Program and Revenue

The tempo for innovation in program and service delivery will increase across the board as “new” will become the dominant theme. With the change in leadership and many of the trends mentioned above, pressure will continue to mount on doing better in every conceivable way.

This will also increasingly affect attempts to generate revenue in dramatic ways, with crowd-sourcing, growing numbers of “Day” drives, cash register round-ups, various digital and social media appeals, and creative attempts to attract funds at unusual special events.

And then, growing at geometric rates, are the funds and individuals granting, loaning and investing in projects that will produce maximum social impact.

Overall, it will be a very healthy year for the nonprofit sector, which will increase as a percent of the GNP and total employment.

While a large part of this vitality will be in the area of health and healthcare related organizations, the positive effects will go well beyond this largest component of the sector and presage opportunity for many, but not all, to achieve a higher proportion of their ultimate potential.

 

---